Boeing and Union Machinists Finally Agree on a Contract

The long, bitter contract dispute between Boeing (NYSE:BA) and union machinists in Washington State finally came to a close on Friday as union members narrowly approved a labor contract that will keep the construction of Boeing’s new 777X in the Seattle area, Reuters reports.

According to Reuters, the mood among Washington state machinists was somber — especially among local leadership who had pushed back against Boeing’s offer in recent weeks over Boeing’s plans to take away pensions. The deal certainly isn’t being celebrated by the majority of union machinists, who in recent weeks have been positioned between a rock and a hard place as Boeing aggressively postured that it would take its work elsewhere even if that meant taking a loss.

“They held a gun to our head and our people were afraid,” said Lester Mullen, a District 751 council delegate. And Jim Bearden, an administrative assistant to machinist District 751 President Tom Wroblewski, explained, “This decision means Boeing hopefully will stop pursuit of another site for its 777X program.”

The vote to accept to Boeing’s contract offer passed 51 percent to 49 percent and was apparently so close that only about 600 votes separated ‘yes’ from ‘no.’ Some union members even called for a recount — something the national union leaders wouldn’t allow. And of the 31,000 eligible voting members in the union, about 8,000 members did not vote, compared to the November ballot where only 5,000 did not vote. This fact is certain to be a source of major contention as there had been complaints leading up the election that the vote had been scheduled at a time when many union members are on holiday vacations. However, the existence of online absentee voting also means there’s less excuse for such a poor turnout.

While sentiment among union machinists was understandably somber, Boeing’s reaction to the results were much more positive. ”The future of Boeing in the Puget Sound region has never looked brighter,” a statement by Boeing Commercial Airplanes Chief Executive Ray Conner read. “This will put our workforce on the cutting edge of composite technology, while sustaining thousands of local jobs for years to come.”

For Boeing, the deal gets the planemaker what it always wanted: the ability to remain in Washington state, where it has built aircraft for 90 years, while also taking some power away from the unions. Analysts and investors had always favored the Seattle area due to lower risk in using the factories and workers who currently build the 777 and the significant cost of moving to another state. With the new agreement, Boeing ensured that machinists won’t have the chance to strike until 2024, when the newest contract expires.

The contract dispute, and specifically how it ended, is also sure to complicate relations between the local International Association of Machinists and Aerospace Workers and the national leadership in Washington, D.C. — the latter of which had forced the newest vote on Boeing’s proposal.

The dispute also made clear the significant rift between younger workers and older workers in the union; while younger workers had been open to the deal, older workers had taken a hard-line stance against the removal of a traditional defined-benefit pension for a defined-contribution savings plan. But with the vote done and the contract secured, it’ll be necessary to see the positives even if not everyone agrees on them.

“I’m very pleased that the best place in the world to build jet airliners for decades will continue for decades to come,” Governor Jay Inslee said in a brief media conference. “This has been a long road, and I respect everyone who has worked on it, but now’s the time to come together, go build this airplane. I’m happy about that.”